The Lowdown on Home Loan Modifications

Back in 2009, during the height of the Great Recession, the Home Affordable Refinance Program, or HARP, was born to help those who could no longer afford to pay their mortgages due to financial hardship or their home being upside down. Applicants that qualify for the HARP program work with modification officers within mortgage lenders to provide all the necessary financial information for them to process the request. In the end, young families can see a reduction in their mortgage payments for a short period of time, giving them a chance to catch up and take a breath. In order to determine if a HARP or home loan modifications program is right for you, here are a few things you need to know.

Qualifications

There aren’t too many qualifiers to be eligible for a HARP. You need to own  either a 1- to 4-unit home as a primary residence, a 1-unit second home, or an investment property of 1- to 4-units. Next, you need to show the timely mortgage payments made on the property — no 30+ day late payments in the first six months and no more than one in the last year. The last items in the qualification process involve you selecting a fixed or adjustable rate mortgage and the type of financing solution that fits your current economic situation. The assumption here is that adjustable rate customers will switch to a fixed rate.

Financial Information

Preparation of your financial data is key when requesting a HARP modification through a new or current lender. At the minimum you need to provide information on your most recent mortgage statement, two current pay stubs, the current and past year tax returns, and any information on a second mortgage or home equity line of credit. Additional information the lender may request includes the last two months’ bank statements and utility bills.

Process Time

Most lending organizations quote a turnaround time of thirty to sixty days once all of the pertinent financial information is received. This deadline can be stretched out if the mortgage company needs additional information from you.

Caveats

There are a few caveats to obtaining a HARP modification. In some cases the amount of the modification is so small it doesn’t amount to much savings each month. Another issue you may run into is lengthy delays due to the overwhelming amount of applications the mortgage lender processes or lost material they need to request from you. The last and probably most detrimental caveat to a HARP application is it doesn’t get approved by the mortgage lender. Should this be the case you may wish to speak to an officer at your current bank or a independent financial adviser to determine the best course of action to save your home from foreclosure.

 

 

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